There is a lot of confusion amongst consumers about credit scores and how they actually work. A common question which many consumers wonder about is why they have 3 different credit scores from the 3 different credit bureaus. Should your scores from Equifax, TransUnion, and Experian not all be exactly the same?

Where Do Credit Scores Come From?

Before you can fully understand why you usually see 3 different credit scores any time your 3 credit reports are pulled it is first important to take a look at how credit scores are generated. Credit reports are created by intricate software programs which are designed to evaluate the information contained in your credit reports and to assign a number (aka score) based upon your level of risk. If a piece of information is not featured on your credit report then it cannot be a factor which influences your credit score. For example, your income if not a component of a credit report. Therefore your income cannot directly influence your credit scores.

Different Scoring Models

Many consumers are also surprised to learn that they have not 1, not 3, but actually hundreds of different credit scores. There are different credit score brands (i.e. FICO and VantageScore), credit scores created for specific industries (i.e. auto adjusted scores, mortgage adjusted scores, general scores, consumer scores, etc.) and different generations (i.e. 1.0, 2.0, 3.0, etc.) of all of these scoring models as well. The result as mentioned is hundreds of different credit scoring possibilities.

In order to compare your 3 credit scores more accurately you should be sure that the scores are (a) pulled at the same time and (b) that all 3 scores are pulled using the same credit scoring model. If a mortgage lender pulls your credit reports then all 3 scores will probably be pulled simultaneously and under the same credit scoring model (most likely a FICO scoring model). However, if you personally check your credit reports and scores at 3 different websites with even a few days in between each credit pull then the scores you receive could be all over the place.

Different Reports

Another common misconception which consumers have is the idea that the credit bureaus work together. Yet the 3 major credit bureaus are actually competitors within the same industry. The bureaus compete with one another for business and each bureau likes to advertise the superior accuracy of their credit report data over the others.

Unsurprisingly, as competitors the bureaus do not share information with one another. Therefore your 3 credit reports, although very similar, will usually have at least some differences. If the information on your 3 credit reports is different, your 3 credit scores will most likely be different as well.

Credit Reporting Is Voluntary

Another fact about credit reporting which is important to understand is that the process is completely voluntary. No creditor or lender is ever legally required to report information about you or your payment habits to the credit bureaus. Most creditors, especially the major banks, do indeed choose to report account management information to all 3 credit bureaus. Yet some creditors will only subscribe to report data to 1 credit bureau instead of all 3 of them. This imbalance in credit reporting is yet another potential reason why your 3 scores could be different.

It’s All about Timing

Even if your creditors do report your account management history to all 3 credit bureaus it is important to understand that all 3 of your credit reports will still not be reported and updated simultaneously. Your credit card from QRS Bank might, for example, report payment history to Equifax on the 1st of the month, report to TransUnion on the 10th of the month, and report to Experian on the 20th of the month. As a result, one credit bureau may have more up to date information than the next bureau – another factor which could certainly lead to a difference in your 3 credit scores.